The Great Recession, One Decade Later

46m
In December 2007, the U.S. marked the beginning of its longest recession since World War II. Now the Consumer Financial Protection Bureau, an agency born in the ashes of the nation's economic downturn, is under new leadership that promises big changes. Meanwhile, a tax plan speeding through Congress could have far-reaching effects on the economy, well beyond taxes. On paper, the U.S. economy looks robust. But for whom, and for how long?
This week, Annie Lowrey and Alana Semuels join our hosts to look at what's happened in the decade since the Great Recession, and what's happening now. What lessons have we learned from the crisis? And which are we doomed to repeat?
Links:
- "The Never-Ending Foreclosure" (Alana Semuels, December 1, 2017)
- "The Great Recession Is Still With Us" (Annie Lowrey, December 1, 2017)
- “The GOP Targets America’s Most Loved and Hated Tax Break” (Alana Semuels, November 2, 2017)
- “The U.S. Isn’t Prepared for the Next Recession” (Annie Lowrey, October 31, 2017)
- “Mick Mulvaney Is Pretending Everything's Totally Normal at Work” (Gillian B. White, November 28, 2017)
- “Could a Tax Fix the Gig Economy?” (Alana Semuels, November 6, 2017)
- “Trump Says His Tax Plan Won't Benefit the Rich—He's Exactly Wrong” (Annie Lowrey, September 29, 2017)
- "Could a Memo by Christina Romer Have Saved the Economy?" (John Hudson, February 22, 2012)
- “The Fight Over the CFPB Reveals the Broken State of American Politics” (David A. Graham, November 28, 2017)
- "The Shadow of the Stimulus" (Ross Douthat, February 1, 2009)
- "Return of the Shopping Avenger" (Jeffrey Goldberg, December 1, 2009)
- The Half Has Never Been Told  (Edward Baptist)
- The Unwinding (George Packer)
- "The Nutshell Studies" (Katie Mingle, 99 Percent Invisible)
- "The Reason This 'Racist Soap Dispenser' Doesn't Work on Black Skin" (Max Plenke, Mic.com, September 9, 2015)

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Transcript

and Alyssa are always trying to outdo each other.

When Alyssa got a small water bottle, Mike showed up with a four-litre jug.

When Mike started gardening, Alyssa started beekeeping.

Oh, come on.

They called a truce for their holiday and used Expedia Trip Planner to collaborate on all the details of their trip.

Once there, Mike still did more laps around the pool.

Whatever.

You were made to outdo your holidays.

We were made to help organize the competition.

Expedia, made to travel.

It's been 10 years since America experienced a financial crisis that plunged the nation into recession.

Now, an agency created in the wake of that crisis has new leadership and anticipates big changes.

Meanwhile, a major bill rushing through Congress could reshape much more than America's taxes.

Are we learning the lessons of the financial crisis or repeating the mistakes that caused it?

This is Radio Atlantic.

Hi, folks.

I'm Matt Thompson, executive editor of The Atlantic.

With me here in D.C.

is my esteemed co-host, Jeffrey Goldberg.

Jeff.

Hello, Matt.

How are you?

I'm fine.

And in New York, we've got our esteemed co-host, Alex Wagner.

Alex, what's going on?

And a good morning to you, gents.

And a good morning to the center of the game.

Not even morning.

You know, first of all, it's a podcast, so it exists outside the time-space continuum.

So listen to the Atlantic.

It's time of the day to you, Jeff.

Yeah, top of the morning, top of the morning, Alex.

So, Jeff and Alex, it has been approximately and officially 10 years since America was seized by a financial crisis and then, in its wake, the Great Recession.

So, it's a particularly timely moment to talk about the economy, economic policy, and all of the money-ish things that are going on in the U.S.

and the world right now.

And I am pleased to report that we are sitting down with two reporters who cover money-ish things for the Atlantic: Alana Samuels and Annie Lowry.

Alana, Annie, welcome to the Radio Atlantic table.

Thank you.

Yeah, thank you.

As we speak, two big business stories are wending their way through Washington.

We've got tax cuts of some sort.

Possibly, we're still figuring this out.

Stay tuned for the latest from the Senate.

And then there is the Consumer Financial Protection Bureau, a regulatory agency born under a Democratic administration that will now ostensibly be remade in the image of the GOP.

Annie, I am very curious about this agency.

What exactly has it done?

And how do we expect that to change now that CFPB skeptical Republicans are in charge?

So this is an organization that was made as part of the Dodd-Frank regulatory reform effort after the Great Recession.

And it basically has a purview over banks, credit card companies, payday lenders,

and it acts as a kind of a consumer advocate.

And it doesn't cost very much money to run.

It's It's not very big, but it has gotten billions and billions and billions of dollars in rebates and in cash payments for millions of consumers in its short lifetime.

So it pays for itself,

this independent agency, and it's clearly going to get gutted from the inside out.

It has always been something that Republicans have really hated.

They argue that there are other prudential regulators,

of which there are many, but this is the only one that's focused on the consumer side.

And so it's always been just bitterly disputed, and it's pretty clear that they're going to gut it.

Trevor Burrus, Jr.: And so my biggest question about the CFPB, it still feels like this kind of tiny wonky agency that is in a corner of the government.

And yet, you know, as you said, millions of Americans have gotten

represented in some form by this agency.

Why hasn't there been sort of big, widespread public attention to the fate or the fortunes of the CFPB?

Why doesn't the public care about this?

Yes.

Why doesn't the public care about it?

Should.

Yeah, I think because

it's small, right?

And because the judgments that it's getting for people oftentimes are relatively small, perhaps, and maybe it's just kind of flying under the radar.

And I think that it's kind of one of these issues that probably the breakdown on it among the American public is pretty partisan as well, I would expect.

You know, you're a Democrat, you're like, oh, okay, like, that's one of those Obama agencies.

We like that.

You're a Republican, you think, well, this is maybe just like another

organ of government intrusion into people's lives or something like that.

But I think that this probably

the changes at the CFPBA is probably not going to be great for consumers of financial products, which means basically every adult in America.

But there's also kind of another argument for it, which is that fraud rates going up in different parts of the economy is one of the best predictors of bubbles, right?

Fraud precedes bubbles always.

There's just too much money sloshing around, and therefore there's too much temptation.

Things get sloppy.

And so, you know, if you look at kind of mortgage fraud rates, like they were going crazy in 2004 and 2005, same thing with like stock fraud back, you know, in 99, 98, 97.

And so having these kind of agencies that are keeping a check on this might be a way to prevent bubbles from happening, but also would let regulators know.

How would you describe the Republican ideological aversion to agencies like this?

It is so deep-seated.

And I think that a cynic would say that it comes from the power of lobbying that business groups have.

That's not ideological.

That's practical.

I'm saying what is the

what I don't understand.

I mean, it's a cognitive problem that I have.

I don't understand why congressmen are also consumers.

They know as consumers that they can get ripped off from time to time.

I just have a disconnect.

For me, I just don't get it.

Right.

So, I mean, the Trump administration administration has made this argument that they raise costs, right?

And that they are, you know, Trump has actually said that the issue with the CFPB is that it's hurting the financial sector somehow, which is kind of a little bit crazy when the whole point is that they are just trying to hold people to the contracts that they've been making.

But yeah, this is, I mean, it's deep-seated, it's ideological, it's practical, I think.

So it's a combination of all these things.

Yeah, and they argue that there's too many regulators.

And to be fair, there are a lot.

There's OCC, there's Treasury, there's the Fed.

There are a lot of financial regulators.

And they argue that all of them, you know, that the industry is over-regulated.

And one way that we know that that's not true is how profitable these companies are, right?

Like, they are very, very profitable.

Are you suggesting that the financial services sector is doing okay?

They're doing great.

Can I just say,

I think we should be

clear.

And when we talk about why this cuts against why something like a Consumer Financial Protection Bureau cuts against the ideology of the Republican Party, we should be clear about which Republican Party we're talking about.

Insofar as, you know, I think there's the classic Republican Party where its sort of business interests are most aligned with it.

And something like a Consumer Financial Protection Bureau feels like anti-business government overreach.

But I do think that in this particular moment, the president is tapped into this wave of sort of populist anger.

And in that way, I think it's kind of interesting to examine why something like a consumer, I mean, a consumer financial protection bureau wouldn't hold water with the people that think the system has been rigged against them, a lot, many of whom were supporters of Donald Trump in the last election.

Anybody got any ideas?

Yeah, I think that's right.

And again and again, President Trump has said conflicting things, conflicting sort of populist things, right?

Like when he was running for election, he talked a lot about how the economy is rigged and, you know,

how much he hated Wall Street.

But now that he's in office, he's gutting the CFPB.

There's some significant efforts to water down those Dodd-Frank protections.

And so I just think it's hard to assign much policy coherence to him.

Are you suggesting that?

Or is the CFPB so coded in the Obama era that everything

that Obama did, touched, or established should be thrown out no matter whether or not it is actually in the interests of the populists.

Well, in the event that there's another bubble

and they've gutted an agency designed to protect consumers, I do think that that could come back to haunt them.

And I do think that the risk that they run is

in a lot of their policies now is in not having a lot of firepower to combat a recession, not having eyes out for sort of

frothiness in the economy, and doing some pretty bad redistributive things that are going to hit

people who have not done especially well in the past 10 years pretty hard.

So who knows when the next recession, you know, there'll be another one.

There's going to be another bubble someplace,

some kind of downturn, and we just don't know where, when.

Annie, can I ask a basic question on behalf of most American consumers who haven't interacted with this relatively new agency?

How does it work?

From a consumer standpoint?

So it

basically you can go and you can make complaints to them.

Directly to them.

Yeah, exactly.

They have like this kind of awesome system of online comments, and then they act as an intermediary where they go and they investigate.

Do they axiomatically have to take on every case that's presented to them?

How does it work?

I don't think that they do that.

But I know that they do kind of like collate these and then they negotiate on the behalf of consumers to say, hey, you know, all these contracts are fraudulent or this is not legal or whatever else it might be.

Aaron Powell, despite the existence existence of the CFPB, we still, over the past decade, have seen banks engaging in some risky, perilous behavior.

We saw Wells Fargo notably opening gajillions, apparently, of fraudulent bank accounts.

That's the technical term.

Yeah,

I think that's the actual term.

I think it was for gajillion.

That's what the NBER said.

What should I infer from that history?

Is it that did it help make that less of a scandal than it might have been or affect less Americans than it might have otherwise?

What was their response like to something that happened squarely in what I would imagine is the CFPB's wheelhouse?

I think that financial firms and banks, as a general point,

got a probably pretty healthy dose of regulation and regulatory scrutiny in the financial crisis.

And they are more regulated now than they were then.

There's all sorts of rules that have to do with all different types of financial products.

Nevertheless, yeah, there's constantly some level of fraud ongoing,

some way that they are kind of fleecing consumers.

And so

I think that it's probably there's probably some appropriate level of regulation, but it's pretty clear that all the regulators on earth didn't stop the mortgage crisis from happening, didn't stop the financial crisis from happening, and caused extraordinary damage to the economy in doing so.

I got to ask this again.

Do Republicans who are opposed to the existence of this agency believe that fraud does not happen?

I don't think that they think that.

So then I don't understand the rationalization for not having an agency to investigate fraud perpetrated against their constituents.

Yeah, I think you could argue that in a lot of places, you know, they

Sorry, I'm busting to the left of you right now.

Well, yeah, but it's I mean it's because it's the government getting involved in business, which Republicans don't like.

I mean, it seems pretty, you know, whether it's arbitration clauses and credit card company agreements or anything like that, which the Consumer Financial Protection Bureau does get involved in.

Here's government trying to tango with our people.

Right.

And you know, there's this Republican.

There was this grand rollicking argument about, you know, maybe the Fed and Treasury should have just not bailed anybody out, right?

Maybe letting them all fail would have been the way to let them self-regulate, but you don't do that because financial crises make recessions so much worse and because you really cause a whole lot of collateral damage by doing that.

You know, in the 1990s, before some of you were born, I was Slate Magazine's shopping avenger.

People don't remember that.

Wait, what?

What?

You did not know?

Shopping Avenger?

I was the shopping avenger for Slate Magazine.

I was the one-man consumer protection bureau of Slate Magazine, and I got extraordinary justice on behalf of people.

So

I'm thinking that if trends continue, the Atlantic might have to step in.

Totally.

If trends continue, you're going to have your own Marvel superhero franchise.

No, shopping avenge.

Shopping events.

You can look it up on the internet.

Black Panther and Jeff Goldberg.

Yeah.

Shopping events.

Tonhoxy Coates and Jeff Goldberg.

Yeah.

But look at that.

But this too is part of the critique, though, right?

Like the part of the critique, whether from the left or from the right, but from folks who dispute the case for the CFPB.

That privately, it should be done privately.

That yeah, that in fact building this into the regulatory sector is ineffective, that there are all sorts of ways around it.

It will either be captured or it will be undermined, or the the band-aid that it can put on the scale of fraud that may happen in the financial sector

is so small, so minimal, that it won't end up saving us from.

I don't know.

I'm going to be more Annie Lowry than Annie Lowry and say that, you know, very few people want fire departments become privatized and for-profit, right?

Very few people want police departments to become for-profit and privatized.

I mean, there are all sorts of functions.

And now I'm going to sound like Obama and say, you know, they didn't build that themselves.

You say that these businesses don't want government intervention.

Well, they use government roads.

You know what I mean?

They use government air traffic control systems.

They use all kinds of government.

So it's like it's these arbitrary and capricious lines are a little bit annoying.

That's right.

And there's a, I mean, there's also just, there's a reason that the financial sector is so heavily regulated, which is that it has to do, you know, it's the lifeblood of the economy, and the damage would be too great if something like 2007 happened and 2007 happened and it was awful.

Yeah.

And it was because 2007 happened, it was in the wake of this galactic economic catastrophe that the circumstances even existed for the CFPB to come about.

Right.

That was one of the legacies of the financial crisis.

But I wanted to shift for a moment to talk about how the crisis hit ordinary everyday folks in the U.S.

Alana, you cover policy from the perspective of the folks who are in the economy and affected by economic policy.

I'm really curious what you've seen.

How have ordinary folks bounced back or not since the Great Recession?

Yeah, I think a lot of them haven't.

I profiled a family that was foreclosed in 2009, and they essentially just put their lives on hold.

They were homeless for a couple of years.

They lost their jobs.

The kids were going to go to college and they couldn't.

And they're still kind of, you know, just getting back to the place that they were before the recession.

And I think that's true for a lot of families.

They had to stop doing what they were doing.

They had to, they lost their jobs.

They couldn't go to the colleges they wanted to.

You know, you look at the bigger economic indicators and you might say, oh, the unemployment rate is lower than it was before the recession, or, oh, we have more jobs than we did.

But there are a lot of other scars, I think.

And you see them in people's credit scores.

You see them in the fact that people aren't buying houses anymore.

You see them in the fact that people aren't saving as much.

I mean, I think there are just

a lot of things that still aren't right with the economy and might not be right for a long time.

Aaron Powell, Jr.: You know, one of the things that I really loved about your article, Alana, is we talk about economics in almost purely financial terms, and we rarely talk about

the economy in an emotional context.

And what your story does is it traces the arc of this family's trauma, and there really is no other word for it, because it's trauma that has been visited upon them and was visited upon them for a prolonged multi-year period.

And when we talk about recovery, we're not just talking about getting back into a house.

We're talking about mental and emotional recovery.

And what happened, the economy actually is hurt by people who have not fully recovered mentally and emotionally from financial trauma.

Yeah, I mean, one of the scary things just reading some of these economic papers is that if you lose your home to foreclosure or if you're unemployed for a period of time, you're actually likely to die earlier than other people.

But yeah, this family I spent some time with, the sons really struck me because they were senior and junior in high school when the family lost their home.

And they were all excited about going to college.

And, you know, one of them was excited about spending senior year with his friends and doing all the fun things you do in senior year.

And they just both kind of dropped off the map and stopped talking to their friends because they were embarrassed.

And they were living out of these hotel rooms.

And they still live with their parents.

I mean, today they still do.

This is, what, eight years after they lost their home and they still haven't gone to college.

Neither of them have.

And that's just crazy to me.

Potential lost.

Yeah, that's that's eight years of,

you know, money that they could have been earning.

That's eight years of education they could have gotten.

Maybe they would have gotten married and bought a house.

I mean, there's so many things that maybe they would have done that they didn't do.

And I love these kind of A-B tests where you look at two families and kind of see what happens.

And

their cousins did not get foreclosed and lived in the same neighborhood.

And their cousins, one of them already graduated from college is a nurse, and the other one is about to finish college.

You just look at those two families right next to each other and you think, okay, that's why the economy isn't back to where it is, because they're families that are still recovering.

Yeah, the one of the, I feel like in the past decade,

since the financial crisis, I feel like we've all gotten an education in the unemployment rate and what it does and doesn't say.

Every month, the new unemployment numbers are released and always financial journalists include this caveat.

You know, the unemployment numbers are one measure of who is and isn't working in the American labor force.

And we keep hearing about this other number, the labor force participation rate, folks dropping out of the workforce altogether, sometimes young folks.

What's happened to those folks?

Why have they dropped out?

Where have they gone?

Yeah, economists don't really know the answer to that, but they have a lot of different ideas.

I mean, there's this one argument that robots and machines replace them, and so there just aren't jobs.

And so people aren't looking for work because there aren't the type of good jobs that they want because the machines are doing them.

Another argument that I kind of like this argument, just because in talking to people in unemployment offices and social security lines, this really popped up a lot is that people are less healthy and so they can't work.

Maybe they have diabetes, maybe they're obese, maybe they have some sort of mental health problem.

And so they dropped out of the labor market.

You know, and then there are other things just saying that there aren't good jobs or that people haven't gotten the education or don't have the skills they need to participate in the labor market.

So economists don't really know why people aren't working.

I mean, the labor force participation rate is either people looking or working for...

looking for work.

And that's the rate that's dropped, especially among men.

And it's at a decade's low right now, is that?

Yeah.

And it's even if you're just looking at prime age workers, there's about a million missing prime age workers that aren't working or looking for work and that's a lot of people who are not defined prime age for me yeah it's 25 to 54 awesome still prime age a big window we're safe yeah and so i'll be exiting the category soon

and so you're

i have to work less and that means that you're not getting people who might be in school though there's probably some of those and there has been aging within that band so the average age within that band is getting higher which might explain some of it but still you know a million missing workers is a lot.

It's a lot of people who are not participating in the best economy of the past decade, arguably, where wages are finally maybe starting to increase a little bit.

And that's bad for them and it's bad for the economy as a whole.

All right.

In a moment, we'll discuss how the money class is doing a decade since the financial crisis and what will happen if Congressional Republicans succeed in pushing through the tax cut that's more than a tax cut.

Stick around.

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Alana, reading your piece, part of the thing that struck me was how extensive the ripple effects of just a foreclosure can be in someone's life.

And I'm curious, what has been in these individuals' lives?

What has happened to them after losing their homes?

Yeah, I mean, there's the the obvious things like having to move a lot, the kids having to change schools,

you know, not having that stability.

But there are also things like blemishes on their credit reports.

And, you know, credit agencies are very secretive about how they come up with these scores.

But it generally takes seven years for a foreclosure to go off your record.

But the crazy thing is that in 2015,

the number of American consumers with negative credit events on their credit scores reached its peak.

So this is

six years after the recession officially ended and only two years ago.

And it's still pretty high.

So

losing a home means your credit is ruined, but then it also can be a lot harder to get your credit back on track.

Maybe you can't borrow money against your home.

Maybe you lost a job, which made you lose your home.

So you can't, you know, pay your credit card bills.

You know, this family I talked to, the husband's wages were garnished by the IRS, which obviously made it much harder to get back on his feet.

So, you know, there are all these ripple effects.

And then there's also this interesting thing called post-foreclosure stress syndrome.

These economists coined that term.

And they say that going through a foreclosure, whether you're the parent or the kids, makes you less likely to want to buy a home in the future, just because it was such a horrible experience.

And that's one reason that they say that homeownership in America is still pretty low.

Yeah.

And for many Americans, and particularly for black and brown Americans, their home was their biggest asset, the thing that they owned.

What have been the lingering effects of foreclosures given that reality?

Yeah, I mean, it completely wiped out people's savings.

A lot of, you know, you hear about a lot of people who were planning to borrow against their home to pay for their kids' college

or pay for some other big expense and they couldn't do that.

So again, it's this kind of this pausing of economic activity so that people couldn't do the things that they wanted to do.

And, you know, I think the instability is really, it can't be understated.

This idea of having to move multiple times.

I talked to one woman who had moved, I think, 15 times in four years.

Wow.

Which is a lot.

And just, you know, not having a home address.

A lot of people, you know, the family I talked to got so low in money that they gave up their cell phones.

So how are you supposed to get a job without a cell phone?

I mean, the instability is just, you know, can last for years.

The economy has recovered for a lot of people, but there are huge segments of the population that it really hasn't.

Younger workers have been hit really hard.

African-American families and Latino families have been hit really hard.

The rich rebounded really well.

They did just fine.

That was going to be my question for you, Annie.

Yeah.

Give us a picture of the flip side of this.

Like, what's happened at the upper echelons of the American economy?

Right.

And, Annie, take into consideration the Senate tax plan that it's making available.

It is

so good to be rich.

You have seen your property values.

Even better than usual.

Yeah, even better than is a great time to be rich.

You know, property values recovered for them, right?

They've had access to really, really, really cheap

borrowing rates if they want to, you know, get a like a 3.625% jumbo mortgage.

Their incomes have gone up, their wealth has gone up, financial markets have recovered.

And the tax legislation under consideration is going to be just awesome for especially rich people who don't do a lot of work.

It's going to be just fantastic.

And, you know, one of the things that it looks like Republicans are going to be doing is creating a large loophole for what's called pass-through income, where all of us, instead of being hired by the Atlantic, will become kind of independent proprietors that will sell our services to the Atlantic.

And then the top rate is going to come down from 39.6%

if you're making a whole bunch of money down to like 20 or 25%.

And so

Republicans insist that this loophole won't be a loophole, but they've not explained how the IRS is going to ensure that it won't be a loophole.

And they're gutting the IRS from the inside out, too.

So I guess

from the folks that you've spoken to, Annie,

and from our history, recent and otherwise, what can you expect?

If the broad contours of the tax cut package, as we know it, sail through Congress or make their way through Congress, I should say,

what can we expect?

So I think that

companies that have stashed money overseas will bring it back.

They're going to get this holiday.

CEOs have told us what they're going to do with the money, which is that they are going to pay out dividends and do share buybacks.

And those are really good for the holders of stock.

And guess who holds stock?

It's rich people.

And so

they have floated this theory that this is going to trickle down to workers, but it's just not a very convincing one.

There's a lot of studies that indicate that, no, this does not translate into huge wage increases or employment increases.

And surely some companies will use this money for additional investment.

But if the economy is not growing that much, you know, like maybe that investment is going to go overseas where growth rates are higher, right?

Like there's no, there's just not clear that your average American is going to get much of a wage increase from this.

But we know we have many examples of companies helping out their shareholders with the cash.

And so that's going to be something that's going to happen.

And look, like, you know, it's $1.5 trillion

of cuts or 2.2, and that functions as a kind of economic stimulus.

And so, yeah, it's probably going to be pretty good for the economy in the short term.

But

they aren't really talking about what programs they're going to cut.

And there's going to be automatic cuts that are going to get triggered in Medicaid and Medicare

because the bill is so big.

And so I think the question is, you know, it doesn't really make sense to talk about taxes without talking about the programs that are financed by them.

Alana, can I ask you a question?

Anybody can jump in, but I think you might know the answer to this.

It's one of the great mysteries of 2017.

And there are a lot of mysteries in 2017, I have to say.

Why Donald Trump didn't spend, with Democratic help, help, a trillion, a couple of trillion dollars on infrastructure.

We know that this country needs infrastructure development.

We know everything's falling apart.

We know that the white working class, and not only the white working class, the black working class, the Hispanic working class,

we know that these jobs are needed.

It's one of the enduring mysteries

of this last period why we haven't seen a Marshall Plan for America's bridges and roads and tunnels and train tracks and highways.

Well, I don't have a window into Donald Trump's brain, unfortunately.

But what am I paying it for?

But I think it goes back to what we were talking about earlier, which is just this kind of Republican knee-jerk reaction to government spending.

They just don't like it.

You know, when I'm traveling around the country and talking to people, people don't even like programs that benefit them.

You know, I've talked to people who keep your government hands off my Medicare.

Yeah, they receive Social Security or they receive Medicaid and they say the government spends too much on

people.

Usually they're talking about other people or they think they are at least.

But I think if you're going to pass a big bill that includes a lot of government spending, people are going to say, well, they're spending my money and they're spending it on someone else.

But those people you're talking about, those people are white working class Trump voters.

That's the disconnect.

I'm sorry to sound like.

Well, not necessarily, but I mean, they could be rebuilding a...

bridge in New Mexico and they say, oh, look, you know, they're building a bridge for Native Americans, but not for me.

I mean,

Amy, what do you think?

Why hasn't there been a huge infrastructure stimulative thing in Congress?

I think that basically the kind of technical answer is that Republicans wanted to get the thing that they had been promising voters over and over and over again passed, and that was Obamacare repeal.

And so this is kind of not on Donald Trump, it's on Paul Ryan.

They went ahead and they did that and obviously failed to do it, although there's significant elements of it in the tax legislation that's currently ongoing.

But you talk to Republican aides, and they now see this as a giant strategic error because nobody actually really cared.

Voters didn't really want Obamacare to get repealed, nor did they seem likely to hold Republicans responsible for doing it.

There was this window of opportunity when they could have gotten Democrats to join together with them on some legislative priorities of theirs because Democrats were ready to go along with infrastructure spending and probably would have joined them in tax cuts too.

But now Democrats seeing how unpopular they are are unlikely to help them with anything.

And so that window of opportunity is closed and they're left trying to pass really, really unpopular legislation by themselves.

Aaron Powell, and what's to prevent them from making this a big year two priority?

Aaron Powell, they could.

It would be hard to pass without Democratic votes because of some technicalities of how things get passed.

It's unlikely that Democrats will be helping them out in an election year, given how unpopular Republicans are.

And Democrats really smell blood in the water, right?

Like they expect to get some really big gains in 2018, and they are not going to, don't believe that they're going to do so by participating in any Republican legislation at this point.

Alana, has the economic pain that has been caused in the last five, 10 years, has that reshaped political leanings at all in a way that has surprised you?

Because

you look at, for example, the foreclosure crisis, which disproportionately affected blacks and Latinos.

And yet we talk about Trump's rise to popularity on this crest of sort of like economic pain and hardship.

Well, the people who were most effective were actually voting overwhelmingly, 80% and I think 66% respectively for Hillary Clinton.

How has this moment,

this trauma that people are living through, refocused and reshaped political opinions?

Aaron Ross Powell, I mean, I think the labor force participation thing certainly has some political influences, I think.

I mean, you see people who aren't working or who aren't looking for work, who are really frustrated and feel really disconnected.

And I think they maybe double down on

who they were already blaming.

So maybe they were kind of moderates or maybe leaning Republican

and they can't find work or they see the jobs being shifted overseas and they maybe double down.

I mean, I'm just thinking of the people that I've talked to in rural Ohio or Indiana who are kind of on the fence and they see the economy getting better.

They see things happening in cities.

They see things happening in maybe Democratic areas like California and New York.

And they're saying, I'm not a part of that.

So why am I not a part of that?

I'm angry about that.

Do you think things like in the current Senate tax plan, there is, well, we're talking about doing away with state and local deductions, which is going to disproportionately affect coastal and blue states?

Same with changing the way graduate students' tuition is accounted for could disproportionately affect universities.

Do you think that's sort of like the Republican retribution, if you will?

Yeah, it certainly seems that way.

I mean, I don't think they sat down and thought, how can we really stick it to the blue states?

But I think if they were looking for places where they could maybe cut or take away benefits, why not look at the elites who are certainly not the most popular people in some parts of America?

I mean, to be fair, that is a lot of the people who do have the money.

You know, taking away the mortgage interest deduction, for example,

is not necessarily a terrible idea.

But looking at who the tax cuts will hurt, there's certainly a lot of liberals

who are going to see their tax bills go up.

So I've asked you guys to look forward to what may happen.

I want to close out this conversation by asking you to look backward a little bit.

I want to know, I'm curious, who was right and who was wrong?

10 years ago, a lot of things happened in this combustive financial crisis.

There were a series of bailouts of the auto industry and the banking industry.

There was a giant stimulus package, although one that was not as giant as many said it should be.

Who was right?

Who was wrong?

Who called it and who didn't?

I'm looking at a post on our own site from Ross Douthet in 2009, who's citing the author Chris Caldwell,

saying the stimulus will be expensive, more expensive than the Iraq and Afghanistan wars combined.

And Ross cites the risk that the stimulus will end up swallowing the broader ambitions of this administration's first four years, speaking of the Obama administration at the time.

That was one representative, I think, criticism of the stimulus at that time.

How did the doomsayers and the stimulus boosters, how did their forecast play out?

Aaron Ross Powell, I think that there's no question that the stimulus was a good idea and helped the economy recover in a way that it might not have recovered otherwise.

The auto bailout also, I mean, if you look at the sector that really started leading economic activity picking up in the aftermath of the recession, it was the auto sector.

And if those car companies hadn't been there, who knows what would have happened with the manufacturing sector in the U.S., with industrial production in general.

I mean, I think the stimulus, you look at lots of economic studies and it says this provided jobs, this provided money to people that otherwise wouldn't have had it.

So I don't think there's any question, especially if you ask economists, that the stimulus was a good idea.

And the only criticism of it is maybe that it should have been bigger.

Right.

And I think that,

so first of all, we know a lot about what worked in the stimulus bill and what didn't.

And so there are some small programs, one called TANF, EF, the TANF Emergency Fund, that worked unbelievably well, whereas some tax programs didn't work quite as well.

Yeah, we know that the stimulus worked, but it wasn't big enough and should have been a great order of magnitude bigger.

And looking at the Obama...

Like, I think that, I don't know off the top of my head, but I think that the number that Christy Romer eventually came up with was like 1.8 trillion.

I don't know if you remember Alana.

It was something huge, though.

Interesting figure, Annie, given the cost of the latest tax cuts.

Indeed, it is an interesting figure, isn't it?

And where the Obama administration really terribly failed was in terms of keeping homeowners in their houses.

And

there was an argument for why they didn't do more.

And, you know, a lot of arguments about moral hazard.

But I think looking back, that's going to be seen as a really dramatic policy failing.

And, you know, and there hadn't been a nationwide downturn in the housing market like that.

So I guess you could argue that perhaps they just didn't know.

But I really think that that was the place in economic policy where they did the worst.

Yeah, and I would also say one thing that's kind of scary given current conditions is that

safety net programs like extending unemployment insurance to 99 weeks

you know, things like that really helped people avoid abject poverty.

And, you know, now the administration is talking about cutting certain safety net programs.

And Annie's written about this a lot.

You just kind of wonder what that means.

One, if there's another recession, and two, even if there isn't to the people that rely on them.

Well,

as we face a handful of new policies that are rolling out now, a new, a newly GOP-ified CFPB and a new tax cut bill that looks to be speeding towards passage.

We will see how it all plays out.

Now let us turn to our closing segment.

Speaking of the future, keepers.

What do you want to keep?

What do you want to remember?

What do you not want to forget?

What have you heard, seen, watched, listened to, experienced recently that you want to keep?

Jeffrey Goldberg, allow me to start with you.

What would you like to keep?

I want to keep the following words, festive vegetarian nutloaf,

which is a term of art that I first saw on Twitter introduced to me by one Annie Lowry.

I never want to eat a festive vegetarian nutloaf, but I just love that combination of words.

She was suggesting this as an alternative to turkey over the recent Thanksgiving holiday.

And for whatever reason, I can't remember anything anymore, as you well know, Matt.

But for whatever, I'll never forget the words, festive vegetarian nutloaf.

Awesome.

One day you're going to come in, and on your desk, there's going to be like a three or four pound foil-wrapped breccupa.

and I'll be calling DC hazmat

Kevin can we please make sure that there's a microphone present when

the festive vegetarian nutloaf appears

Annie how about you what are you keeping so I've been reading this really amazing book called The Half Has Never Been Told and it is so good and it's one of the few histories that's really changed my understanding of something integral and the book is about how I had I think a lot of other a lot of other people had this idea that slavery prevented the South from developing like the North had, but this book basically makes a really convincing case that slavery was what made America rich and asks all sorts of deep economic, moral, political questions.

The half has never been told.

Drop a link in the show notes.

Alex, what's your keeper?

Well, I keep thinking, you know,

it's difficult and traumatic in its own way to be a journalist in these times.

And one of the things that I think is missing is a sense of context for all of it.

And when we talk about, this is a great episode for many reasons, but mostly because of Alana and Annie, and the fact that we're talking about what happened in relation to where we are now.

And it is, in a way, soothing to think about all of the events of the last 10 years as being of a piece.

So my keeper is George Packer's The Unwinding, which was one of the first books that kind of really looked, this is before the rise of Trump, but sort of looked at some of the underpinnings of the movement that would actually bring him into the White House.

But it's told from a narrative point of view.

And I think like Alana's great reporting for The Atlantic, it gives us a sense of the human cost and

the really tangible emotional sense of loss that is pervasive in this country right now.

And I think probably too often ignored.

by some of us in the Acela Corridor.

I am mostly talking about myself here.

But at any rate, George did a great job.

Everybody should read it or reread it.

Awesome.

Thank you, Alex.

So I'm going to go next.

Recently, I have been for years

hoping to get a glimpse in person of these amazing dioramas, which are known to us as the nutshell studies.

An heiress named Frances Glessner-Lee in the mid-20th century discovered that the field of forensic examination, like when homicide detectives or detectives from police department would go to a crime scene, they had no idea

what clues they could infer just from looking at the scene originally.

And so as a result, they would just trample all over vital evidence.

They would pick things up with their fingers, leaving

grubby fingerprint paws all over things that would be material and trying to explain what went wrong, why someone died.

And so this heiress, Frances Glesner-Lee, created these amazing, meticulous recreations of grisly scenes of death.

They have been used for decades, for generations, to teach would-be forensic scientists how to read the scene of a death.

And they have been kept in the chief medical examiner's office in Baltimore, rarely exhibited, but are currently on exhibit at the Renwick Gallery in Washington, D.C.

If you can go see them, do.

I've seen it.

I intend to go back.

They're murdered all houses.

They're great.

If you can't go see them, then I'm going to recommend to you a stellar, stellar episode of Roman Marr's incandescent podcast, 99% Invisible, in which he talks about the nutshell studies.

And you can hear more about how they were done and

the impact that they've had on the field of forensic science.

So that's my keeper.

The nutshell studies.

Can't wait to see them again.

Alana Semuels, what would you like to keep?

Okay, so I've been in a lot of airports lately.

I've been traveling a lot, and I always go to the faucets in the bathroom.

You know, those automatic faucets, and they never work for me.

Never.

Like, I feel like I'm a ghost, and it drives me crazy.

So I Googled it recently just because I was curious.

Am I a ghost?

Is that what you Googled?

And it said yes.

And I came across this amazing video in which a white person and a black person both try to use the faucets.

No way.

And it worked for the white person and not for the black person.

And they did it they did like multiple trials because there's apparently these infrared sensors that only read certain types of skin colors i'm i'm not exactly sure how it works um but the videos are amazing they're on mic the website um

and

i just find that absolutely fascinating can i ask an obvious question though but you're not a black person i am not a black person so you're a ghost so i am either a ghost or i don't know how to use those automatic faucets i

uncovered you uncovered latent racism in the process.

Yeah, exactly.

Not so light, though, let's be honest.

Yeah, I do have, I will call it olive skin.

Sure.

I'm with you on that.

I'm totally with you on that.

And like the Browning of America continues, but still, as it concerns the faucets, you may just be.

This is a whole new chapter for your book.

As a black person, I can only say that this explains so much.

So much.

I have to go through so many ministrations to make sure that my hands are meticulously washed.

We should let the Consumer Protection Bureau know.

Yeah.

They should get on on this right away.

And I'm sure they will.

And once again, that's another week of Radio Atlantic.

This episode was produced and edited by Kevin Townsend and Diana Douglas with production support from Kim Lau.

Thanks to Alana Samuels and Annie Lowry for joining us.

And thanks as always to my co-hosts, Jeff and Alex.

Thanks to the one and only John Batiste for the masterful version of the Battle Hymn of the Republic that plays us in this week and every week.

Have we learned the right lessons from the financial crisis?

Leave us a voicemail with your thoughts and your contact info at 202-266-7600.

Check us out at facebook.com slash radioatlantic and theatlantic.com slash radio.

Catch the show notes in the episode description.

And if you like what you're hearing, rate and review us in Apple Podcasts and subscribe in your preferred podcast app.

We so appreciate it.

Most of all, we appreciate you for listening.

Whatever your personal festive vegetarian nutloaf is, I hope you savor it.

We'll see you next week.